In the aftermath of a murder spree in southern France by a self-declared Al-Qaeda gunman, the right-wing incumbent has closed the gap with Socialist challenger Francois Hollande in first round voting intentions.

But opinion polls still forecast that the challenger will carry the May 6 run-off, with French voters favouring the left’s economic plans over austerity measures that Sarkozy has agreed with France’s EU partners.

As the international business press attacked France for being “in denial” about its debt, a Harris poll showed eight out of 10 voters support its strong welfare state and Hollande is the candidate they most trust to protect it.

While polls suggest French voters already think Sarkozy’s cost-cutting has gone too far, voices from the world of global finance accuse both the president and his challenger of failing to speak out about the real issues confronting the economy.

“France has not balanced its books since 1974. Public debt stands at 90% of GDP and rising. Public spending, at 56% of GDP, gobbles up a bigger chunk of output than in any other euro-zone country,” The Economist magazine warned this week.

“Yet what is most striking about the French election is how little anybody is saying about the country’s dire economic straits,” it said, echoing a Financial Times editorial which accused France of ignoring global changes.

In the wake of 23-year-old Mohamed Merah’s murderous attacks, Sarkozy re-launched his campaign with a promise of tough anti-extremist measures and with a wave of arrests in Islamist circles unconnected with the shooter.

Now he will once more have to defend his economic record.

The president began his week with a trip to northern France’s rust belt, and was on Wednesday to visit the economically-isolated Indian Ocean territory of Reunion, before unveiling his full economic strategy on Thursday.

In an interview published on Monday in the regional daily L’Est Republicain, Sarkozy said he aims to shave 115 billion euros from the national budget over the five year presidential term and balance the books with a deficit of zero in 2016.

“Since the start of the campaign, I haven’t stopped bringing up new ideas,” he said, insisting that he had not sought to distract from his unpopular economic measures by focusing on security and immigration.

“Francois Hollande has come up with one thing — a 75 percent tax that he admitted one day later would not bring in a centime,” he said, mocking the Socialist’s awkward presentation of a proposed new tax on high earners.

“I’m fighting to make businesses more competitive and innovative. I’m fighting to increase wages. Last year, nine million wage-earners worked overtime for which they were not taxed,” he said.

Hollande has warned he will seek to renegotiate the European fiscal pact that Sarkozy hammered together last month with France’s partners, which aims to slash eurozone member states’ deficits through tough austerity measures.

The French left would prefer to mitigate the austerity with investment for growth, arguing deficits will only fall when more Europeans get back to work and that cut-backs in a time of crisis will only kill the recovery.

Hollande’s promise has annoyed France’s allies — in particular Germany’s Chancellor Angela Merkel — and Sarkozy insisted that he had signed the pact “in the name of France” and would not back out of it.

He told L’Est Republicain that he planned to slash spending by 75 billion euros and boost revenue by 40 billion.

“For that, I’ve already passed measures to raise 32 billion. For the other eight, I propose taxes on large companies and on tax exiles,” he said, citing a plan to recover revenue kept abroad by French firms and individuals.

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